Lowering of EU Tariffs on China Opposed by European Parliament

  • Call to retain scope for higher duties in Chinese trade cases
  • European assembly sends warning before mid-year proposal

The European Parliament signaled it would reject any proposal to lower Europe’s import tariffs against China, highlighting concerns that industries from steel to solar are vulnerable to a flood of Chinese shipments.

The European Union assembly weighed into the politically charged debate about whether the EU should recognize China as a market economy, a prize sought by Beijing. Such a step would make it more difficult for European manufacturers to win sufficiently high EU duties meant to counter alleged below-cost -- or “dumped” -- imports from China. That’s because it would force the EU to use Chinese data instead of other nations’ figures to calculate anti-dumping levies against China.

Under the agreement that led China to join the World Trade Organization in 2001, WTO members pledged to scrap in December 2016 a shortcut for applying a non-market economy standard in calculating anti-dumping duties on China. At the same time, this development won’t grant China blanket status as a market economy.

In a resolution on Thursday in Strasbourg, France, the 28-nation Parliament said the European Commission should use “a non-standard methodology” in dumping cases involving China until the country fulfills five EU criteria for determining whether trade partners can be considered a market economy. The assembly also said the commission, the EU’s executive arm, should give “full effect” to the scope under China’s WTO deal for applying a non-standard methodology.

The resolution amounts to a warning shot across the bow of the Brussels-based commission, which is due in July to make a proposal on whether the EU should recognize China as a market economy in dumping cases. European Trade Commissioner Cecilia Malmstroem has signaled openness to such a step, which would need to be approved by the EU Parliament and the bloc’s national governments.

The issue has become a flashpoint in Europe as a sluggish EU economy, excess Chinese production capacity and a struggling European steel industry spark fears of a manufacturing decline and further job losses from the U.K. to Italy.

China argues that the terms of its WTO accession require recognition of the country as a market economy in dumping cases beginning in December. The U.S. government disagrees and isn’t planning a policy change, risking a Chinese complaint to the global trade arbiter.

In its resolution on Thursday, the EU Parliament urged the commission “to coordinate with the EU’s major trading partners” on anti-dumping policy toward China after 2016 and “to oppose any unilateral granting of market-economy status to China.”

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